Are properties encumbered with PACE obligations eligible for FHA-insured financing?

No. Properties where the Property Assessed Clean Energy (PACE) obligation will remain in place after the sale of the property or the closing on a mortgage are not eligible for FHA forward mortgages or Home Equity Conversion Mortgages (HECM). 

For additional information see Mortgagee Letter (ML) 2017-18 at:

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-03437